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China cotton textile company monthly review – may, 2013

China cotton textile company monthly review – may, 2013 Source: www.chinatexnet.com
Date: 28-06-2013
Visits: 352
Very Poor

As traditional off season came for textiles, the raw material purchase in May declined, so was the finished product inventory. Downstream orders reduced meanwhile mills were cautious at order reception due to cost reason, and production of yarn and cloth reduced over the month, sales was sluggish and the operation was barely maintained.

1.Raw material purchase and inventory

1.1Decline of raw material purchase

In May, purchase of all materials declined by 20% over the month according to survey. Orders during January to April were relatively abundant while reduced in May, so raw material purchase also declined due to the off season starting from June, July and August.

As for raw cotton purchase, reserve cotton released some import cotton during the early and middle May, which was welcomed by mills. Some middle and small sized companies had neither enough money nor import quotas, so they had to purchase second hand cotton, which increased cost and reduced purchase volume. According to survey, raw material purchase reduced by 14.8% over the month, among which import cotton increased by 19.8% over the month, mostly from the reserve cotton or import cotton distributed according to reserve sales.

As for chemical raw material purchase, in May polyester staple fiber declined slightly and viscose staple fiber had mixed prices. Generally chemical fiber and new type fiber purchase declined largely, because chemical fiber has high quality consistency, so mills did not have to store much with current insufficient downstream demand.

1.2Raw material inventory increased Y/Y, while decreased over the month

Based on raw material stock of the first five months, the stock reduced largely in January, and recovered during February to April, and declined again in May. The raw cotton average stock was 24 days, 4 days less over the month, and larger decline was seen in middle and small sized companies.

According to survey, raw material inventory in May increased by 5% Y/Y, 16.2% less over the month, the increase rate was much less than last month, among which raw cotton increased by 1% Y/Y, 14.7% less over the month, import cotton increased by 17.2% Y/Y, and up by 3.4% over the month; chemical fiber inventory increased by 20.3% Y/Y, 22.1% down over the month.

2.Production and finished product inventory

2.1Mixed production of yarn and cloth in May

Yarn and cloth production in May was better than 2012, though pressure felt by mills was still heavy, while in May the decreased demand from downstream and financial difficulty caused yarn and cloth production decline. Companies expect government supportive policy on industry upgrading and financial problems.

According to survey, yarn production in May increased by 0.4% Y/Y, 0.7% down over the month, the cumulative production during January to May increased by 3.9% Y/Y; cloth production decreased by 2% over the month, and 1.4% up Y/Y, and cumulative production during the first months decreased Y/Y.

The increase was mainly due to operation rate increase of some big companies, though operation reduction or suspension of small mills was still prevailing.

2.2Sales

Sales of yarn and cloth in May were less than April, and margins were squeezed to maintain operation and liquidity.

The average yarn counts increased slightly, while 32s yarn price decreased. To be specific, regular pure cotton yarn price was down due to raw material price decrease and import cotton price; combed high count yarn had steady price. Rayon knitting yarn, rotor spinning and vortex spinning yarn were contributed mainly to short and small orders, and the price of which decreased; the polyester and cotton blends yarn also decreased in price, fine denier polyester yarn had relatively steady price.

As for cloth, pure cotton grey fabric had lower price; high count and high density fabric had higher price; polyester and cotton blend fabric had steady price under support from downstream though polyester staple fiber price vibrated; rayon fabric price decreased affected by raw material price. As for product mix, batik fabric, yarn-dyed fabric and bedclothes had steady price and production quantity.

2.3Yarn and cloth inventory declined

The downstream demand shrank during the off season; yarn and cloth kept the previous inventory level due to the sales promotion in May and production reduction.

According to survey, yarn inventory reduced by 1.1%, driven by chemical yarn. In aspect of different products, pure cotton yarn inventory increased by 10%, mostly due to price decrease in early May; pure chemical yarn inventory declined over the month due to production cut.

Cloth inventory increased by 1.4% over the month, although the production of which had already been cut due to price decline and downstream demand reduction.

Monitored by: China Cotton Textile Association

Monitored Subjects: major textile companies in 17 provinces
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